Mortgage Protection: Redundancy Cover

Customers often contact us asking, “Does mortgage protection cover redundancy?” The answer is yes. You can get protection to cover your mortgage in case of redundancy, though the policy will depend on what you want covered and your personal circumstances.

Mortgage payment protection insurance (MPPI) is commonly referred to as mortgage cover for redundancy, mortgage redundancy insurance, or mortgage redundancy protection. It can help you with your monthly repayments if you lose your job or are unable to work in certain other circumstances.

If you feel you may be at risk of facing redundancy after the mortgage application, or you want the peace of mind that your home is protected from unforeseen circumstances, taking out a mortgage redundancy protection insurance policy could be the way forward.

For more information on MPPI, call us on 0330 818 7026 or make an enquiry, and we’ll pass your enquiry on to a specialist. In the meantime, read this guide for all you need to know about mortgage payment protection redundancy cover.

What’s included in mortgage protection insurance redundancy cover?

Several types of MPPI are available, so what is covered will depend on the product you choose. The types are “unemployment only”, “accident and sickness only”, and “accident, sickness and unemployment”.

As the name suggests, “unemployment only” will give you mortgage protection against redundancy. “Accident and sickness” will protect you against accidental injury or long-term illness which prevents you from working. “Accident, sickness and unemployment” will cover you for all three.

So, if you’re looking for mortgage protection for redundancy, opt for “unemployment only”.

Is mortgage protection for voluntary redundancy covered?

While policies vary by provider, many insurers will not pay out if you take voluntary redundancy. One of the reasons for this is that voluntary redundancy payouts tend to be considerably higher than involuntary redundancies.

Always check the terms and conditions before taking out mortgage insurance redundancy protection to see in what circumstances you’d qualify for a payout.

How much does mortgage protection with redundancy cover cost?

The price of your MPPI policy will vary depending on which type of cover you choose. “Accident, sickness and unemployment” is understandably more expensive than “accident and injury only” or “unemployment only”.

Other factors will also play a role, including your age and the cost of your mortgage repayments.

Contact us to find out how much mortgage protection insurance for redundancy will cost you a month. We’ll then connect you with an advisor who will generate accurate quotes tailored to your individual circumstances.

What payout can I expect from mortgage cover if I’m made redundant?

The amount your insurer will pay will depend on the type of cover you’ve selected. Most providers will allow you to claim up to 125% of your mortgage as a contribution to associated costs such as energy bills and council tax.

There are caps in place. Most MPPI policies will not pay out more than £2,000 per month or around 65% of your monthly income⁠, whichever is the cheapest.

The maximum time you can expect your payments to be covered is two years, although some only cover one year. If you’re a sensible saver with emergency funds available, redundancy protection for your mortgage may not be necessary.

When will my mortgage redundancy protection policy be paid out?

Each MPPI policy has an excess period, so you should also have the option to add “back to day one cover”.

The excess period is how long you must wait before receiving your first payment. This typically ranges between 30 and 90 days. So, if you have a 30-day excess period, you can expect to receive your monthly payments 30 days after submitting your claim.

“Back to day one” policies backdate your payments from the day the cover started. So, a “back to day one policy” with a 60-day excess period means you would receive two monthly payments after this time.

It’s usually a good idea to have a minimum of two months’ worth of mortgage payments in savings to ensure you’re covered for downtime.

Which providers offer redundancy insurance mortgage protection?

Several insurers offer MPPIs, ranging from high street banks and building societies to more niche independent providers.

Mortgage redundancy cover Halifax

For example, Halifax and Lloyds Bank offer mortgage redundancy cover but restrict this to cases of involuntary employment only.

Speak to an expert about mortgage protection insurance against redundancy

If you have any more questions surrounding redundancy cover on a mortgage or want advice on whether it’s a suitable product, don’t hesitate to get in touch.

We work with a team of whole-of-market experts, some of whom have specialist knowledge in mortgage payment protection insurance products. They can give you advice bespoke to your needs and help you seek out the best quotes and most suitable providers on the market.

Submit an enquiry or call us on 0330 818 7026. We don’t charge a fee, and you’re under no obligation.